Vietnam urged to relax restrictions on foreign property investment
08-10-2014
New launches have risen in Ho Chi Mihn City but secondary values are down
Vietnam urged to relax restrictions on foreign property investment
Singapore developers and investors are urging Vietnam to open up its real estate sector more to foreign investment, but there is still some resistance from within the country
Singapore agents and investors are urging the Vietnam real estate market to relax restrictions on foreign investment but it seems there is still some resistance to change.
SLP SingaporeLeading Singapore agency, SLP International, has met with the Real Estate Association in Vietnam to seek closer ties and discuss business development.
SLP’s Managing Director, Tricia Teo, says, “Vietnam is considered a very attractive destination among Singaporean investors, and we have the investment sources and private funds required for real estate projects as well as a clear strategy and experienced human resources,” the Vietnam Investment Review reports.
If government plans allowing foreigners greater rights to buy homes in Vietnam was passed, Singaporean demand would rise further, she says.
Vietnam enjoys a stable economy, with the World Bank predicting growth of 5.5% in 2014, but despite the fact that the number of Singaporeans looking to buy property there is rising, there is still a need to make it easier for foreigners to buy, SLP says.
Overseas Vietnamese and other foreign passport holders are permitted to own apartments for a maximum period of 50 years and The Ministry of Construction has proposed allowing foreigners to buy more types of housing to boost the housing market
However, in a separate development, the head of Vietnam’s HCMC Real Estate Association, has been quoted by the local press as saying that the authorities should not allow foreigners buy homes in Vietnam even though the Ministry of Construction has been considering looser restrictions, the TalkVietnam.com website reports.
Chairman, Le Hoang Chau, says, “For the first five years, Singapore allowed foreigners to buy only apartments. The ban was gradually lifted over the next five years, but buyers still have to pay higher taxes. We shouldn’t allow foreigners buy villas and houses yet while external security threats to Vietnam still exist. This would make the situation difficult to control in the future.”
Developer Keppel Land, one of Vietnam’s largest foreign real estate investors, which has properties in Hanoi, Ho Chi Minh City, Dong Nai and Vung Tau, has built nearly 22,000 homes in Vietnam, including waterfront homes, integrated townships and serviced residences.
President, Linson Lim says, “We are pleased to report that home sales for Keppel Land have been encouraging. We sold over 350 homes in Vietnam last year and in the first half of this year. As one of the first foreign developers to enter Vietnam, Keppel Land will continue to stay the course and build on the strong partnerships forged to grow with the country.”
In March, its CEO, Ang Wee Gree met with government officials to discuss the market and the company’s products.
Keppel Land has just announced a conditional share purchase agreement with its Vietnamese partner, Tien Phuoc Co., Ltd, to buy an additional 43% effective stake in The Estella phases 2 and 3 held by Tien Phuoc in the Estella Joint Venture Company Limited, which will take its share to 98%.
The Estella is a residential development comprising more than 1,500 apartments with a retail component located in the popular An Phu Ward, District 2, Ho Chi Minh City (HCMC), Vietnam.
Phase 1 of The Estella has been completed. It comprises 719 units which have been fully sold and handed over to homebuyers, except for the final batch of nine penthouse units which was recently released for sale.
Linson Lim, the company’s President in Vietnam, says, “Keppel Land has been growing with Vietnam since the 1990s and is one of the pioneer real estate developers in the country. The acquisition of the phases 2 and 3 in The Estella reflects Keppel Land’s long-term commitment to contribute to sustainable urbanisation of Vietnam with our quality portfolio of properties.”
Phase 2, targeted for launch in early 2015, is expected to yield more than 500 homes ranging between 60square metres to 180square metres including penthouses and shops.
“We remain confident in the long-term growth potential of Vietnam’s property market. It has a young and dynamic population and a growing middle-class with strong aspirations for home ownership,” Mr Lim adds.
“The city’s high urbanisation rate, improving infrastructure and declining interest rates will also support demand for housing. We are confident that the subsequent phases of the development will enjoy the same positive demand from homebuyers and investors seeking quality properties with strong attributes and value offerings.”
The Estella is a 15-minute drive to HCMC’s central business district via the East-West Highway and Thu Thiem Tunnel. Families with school-going children will appreciate the site’s close proximity to reputable international schools such as the British International School, International School of HCMC-American Academy, European International School and Australian International School.
The Estella is also located close to the future metro station which will open in 2018 and which will connect residents seamlessly from the central business district to District 9 of the city.
Data from leading international property consultant CBRE shows that new condo launches are up in Ho Chi Minh City, although prices are falling.
From January-March 2014 there were 1,887 new units launched, up 140.7% year-on-year, all in the high-end and mid-end segments. The high-end segment accounted for 42.4% and achieved a good sale rate (80% at Green Valley and more than 70% at Icon 56).
But secondary market prices have continued to fall with the high-end suffering most, down 5% year-on-year, as incentives on new properties such as long payment schedules (up to two years) combined with promotions (gold, car, free management fees) have forced re-sellers to lower prices to stay competitive.
Annual sales almost doubled to around 2,700 units, suggesting that buyers are returning to the market in both the high-end and lower end sectors, says CBRE.
Among other recently-announced projects is the superyacht marina site, in Vung Ro Bay, Vietnam, from Singapore’s ONEo15 Marina Club.
The developer announced the signing of a Memorandum of Understanding with Vung Ro Pateroleum Co. Ltd to develop the marina site into hotels, residential villas, retail and dining spaces, 400m of beach and a marina.
Property buyers from Singapore, Japan and the Republic of Korea are among those who see Vietnam as an important investment destination, says Neil MacGregor, Managing Director of Savills Vietnam.
He told the Vietnam-Singapore Business Forum 2014 in Ho Chi Minh City that thanks to economic improvements, Savills expect real estate investment in residential buildings, as well as hotels and offices, will rise.
Singapore has just announced Foreign Direct Investment in Vietnam of SGD30.5billion (US$24.51billion), making it the third largest source of FDI in Vietnam. A third of those FDI projects are dedicated to real estate developments via local subsidiaries of Singaporean firms, Vietnam’s Ministry of Planning and Investment (MPI) has announced.
Lim Hng Kiang, Singapore’s Minister of Trade and Industry, says, “I would encourage companies to continue exploring business opportunities in Vietnam.”
By Adrian Bishop, Editor, OPP Connect
Twitter: @oppnews